Former Elpida Exec Heads to Jail for DRAM Price-Fixing

By Colleen Taylor -- Electronic News, 11/17/2006

A former executive of Japan-based DRAM maker Elpida Memory has agreed to plead guilty, pay a $250,000 criminal fine, and serve prison time in the U.S. for participating in a global conspiracy to fix DRAM prices, according to a statement released Thursday by the U.S. Department of Justice (DoJ)

So far, the Department has charged four companies and 17 individuals, and has secured fines totaling more that $731 million, as a result of its ongoing antitrust investigation into price fixing in the DRAM industry.

The Department charged that D. James Sogas of Burlingame, Calif., participated in the price-fixing conspiracy in his capacity as VP of sales for Elpida Memory. Sogas was charged with violating the Sherman Act in a one-count criminal charge alleging participation in an agreement to fix prices of DRAM and to coordinate bids on auctions held by a DRAM purchaser.

Under the plea agreement, which must be approved by the court, Sogas has agreed to serve seven months in prison and to pay a $250,000 criminal fine. In addition, Sogas has agreed to assist the DoJ in its ongoing investigation of the DRAM industry.

According to the one-count felony charge filed today in federal court in San Francisco, Sogas conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain original equipment manufacturers from on or about April 1, 2001, to on or about June 15, 2002, and to coordinate bids on Sun Microsystems Inc. auctions held on Dec.5, 2001, and March 26, 2002. The price-fixing scheme directly affected sales to U.S. computer makers Dell Inc., Hewlett-Packard Co., Compaq Computer Corp., International Business Machines Corp., Apple Computer Inc., Gateway Inc., and Sun Microsystems Inc.,  the Department said.

Sogas is the first Elpida Memory executive to agree to a prison sentence in the DRAM investigation. Three foreign-based Samsung Electronics Ltd. executives, Sun Woo Lee, Yeongho Kang and Young Woo Lee, pleaded guilty to the DRAM price-fixing conspiracy in March and August. The Samsung employees agreed to serve prison terms ranging from seven to eight months and to each pay a $250,000 criminal fine. Then, Thomas Quinn, a fourth Samsung executive, pleaded guilty and was sentenced to serve eight months in prison and to pay a $250,000 criminal fine for his role in the DRAM price-fixing conspiracy.

In addition, four Hynix Semiconductor Inc. executives, Dae Soo Kim, Chae Kyun Chung, Kun Chul Suh, and Choon Yub Choi, were charged with participating in the DRAM price-fixing conspiracy and agreed to plead guilty and serve jail terms ranging from five to eight months and to each pay a $250,000 criminal fine. In December 2004, four Infineon executives, T. Rudd Corwin, Peter Schaefer, Gunter Hefner and Heinrich Florian, pleaded guilty to the DRAM price-fixing conspiracy. The Infineon employees served jail terms ranging from four to six months and each paid a $250,000 criminal fine.

Also, in December 2003, the Department charged Alfred Censullo, a regional sales manager for Micron Technology Inc., with obstruction of justice. Censullo pleaded guilty and admitted to having withheld and altered documents responsive to a grand jury subpoena served on Micron. Censullo was sentenced to serve six months of home detention.

In October, an indictment was returned against Il Ung Kim and Young Bae Rha, two executives from Samsung and Gary Swanson, an executive from Hynix America, the U.S.-based subsidiary of Hynix, charging them with participating in a global conspiracy to fix the price of DRAM from on or about April1, 2001, until on or about June 15, 2002.

In total, four companies have been charged with price fixing in the DRAM investigation. Samsung pleaded guilty to the price-fixing conspiracy and was sentenced to pay a $300 million criminal fine in November 2005. Hynix also pleaded guilty and was sentenced to pay a $185 million criminal fine in May 2005. In January, Elpida agreed to plead guilty and pay an $84 million fine. In October 2004, German manufacturer Infineon pleaded guilty and was sentenced to pay a $160 million criminal fine.

And the Department of Justice isn't stopping there: it has also launched an investigation into the SRAM industry. Both Cypress Semiconductor Corp. and Mitsubishi Electric Corp. have been notified that the Department is set to investigate sales of SRAM in the U.S.